Financial Data Boosts MSCI

11/23/2015 8:00 am EST


Michael Cintolo

Vice President of Investments and Chief Analyst, Cabot Heritage Corporation

Our latest featured recommendation is a company that offers a relatively rare commodity in international investing: completely reliable and objective data on what’s actually going on in markets, explains Mike Cintolo, editor of Cabot Top Ten Trader.

MSCI (MSCI) provides a myriad of global indexes that convey performance in regions, markets, countries, asset classes, and by valuation, style, and currency.
The company’s roots go back to Capital International, the first publisher of market indexes for non-US markets, which was founded in 1968.

After Morgan Stanley licensed the rights to Capital International’s indexes in 1986, the brand changed to Morgan Stanley Capital International, yielding the MSCI moniker.

Subsequent acquisitions—Barra in 2004, RiskMetrics in 2010, Investment Property Databank in 2012, Investor Force in 2013, and GMI Ratings in 2014—have diversified the company’s analytic capabilities.

MSCI was spun-off from Morgan Stanley in 2007 and divested in 2009. MSCI gets the majority of its revenue (58% in 2014) from the publication of its indexes, with risk analytics kicking in 31% and portfolio management analytics 11%.

While MSCI’s stock has been in a long-term uptrend since late 2012, the recent excitement stems from the company’s Q3 earnings report on October 29 that featured a 20% jump in earnings, which were reported at 60 cents per share, well above the expected 53 cents.

MSCI is a well diversified vendor of one-of-kind market information and analytics and should continue to grow steadily, especially if the market continues higher. Its stock pays a 1.5% annual dividend yield.

The stock has been a steady performer since going over the falls in October 2012, when it dropped from $35 to $24.

The stock advanced steadily to $68 at the end of last July, then fell with the broad market, first to $58 in late August then to $57 as October began.

A strong rebound from that level developed into a real blastoff late in the month, and on November 2, MSCI roared to $71 on a big volume spike.

The stock has been retracting in an orderly way since that high and looks buyable here.

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